We’ve Passed #1, In #2… Next Up Comes the Big Drop

Today should be the peak of end of the quarter performance gaming.

Stocks have rallied hard for three days. The financial media has seen this as indicating the worst is over. But the fact of the matter is that most of this is performance gaming aided by various Fed officials issue verbal interventions yesterday.

Moreover, there’s a historical pattern here: stocks tend to lead summer rallies into the Fourth of July. With that in mind, the technical pattern we noted earlier this morning remains in play with the S&P 500 rallying to retest support.

As noted on Wednesday, market collapses follow a particular pattern:

1)   The initial drop breaking support

2)   Bouncing to re-test support

3)   The larger drop

As noted on Wednesday, the S&P 500 has completed #1 and is now in #2. I expect the markets will hold up into next week. But at that point we’ll be primed for a serious collapse.

If you have not taken steps to prepare for a market collapse, we have a FREE Special Report that outlines how to prepare your portfolio. To pick up a copy, swing by:

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Best Regards

Graham Summers

Comments

[Farside]

We need a chart to tell us we're hip deep in #2?

[ZerOhead]

At least the constant showering of #1 on us seems to have passed...